The first case study was of the Freelancers Union nonprofit, which received $340 million under Obamacare to establish co-ops in New York, New Jersey and Oregon.

Freelancers was ineligible for federal co-op funding due to its for-profit subsidiaries. But aggressive lobbying of the Obama White House and the Department of Health and Human Services got around that roadblock and resulted in $25 million of the $340 million being improperly diverted to one of the for-profit subsidiaries.

Conflicts of interest

The second case study looked at the failed Vermont Health Co-op, which was riven with conflicts of interest and folded after state insurance officials refused to grant it a license to operate.

The Oversight Committee's staff report also described independent reviews that questioned the financial viability of the co-ops, suggesting, for example, that the Freelancer's Union either "is holding too much cash in reserves or that they are over-stating assets.”

The Wednesday hearing won't be the last word on the co-ops because the committee concluded its report with this warning:

"In the weeks and months ahead, the committee will continue its work to ensure that Congress and the American taxpayers have the requisite information to fully assess the true costs of the ObamaCare CO-OP program."